Hospital tax status resolved, Wethersfield takes first action

Friday

Feb 15, 2013 at 10:34 PMFeb 15, 2013 at 10:36 PM

State rules hospital is tax exempt

Dave Clarke

The Wethersfield School Board learned Thursday night that the Illinois Department of Revenue has, after four years, ruled Kewanee Hospital tax exempt.The board took the first step in “righting the financial ship,” so to speak, by making a final decision on the 2013-14 tax levy. Board members were faced with the decision of either amending the levy, passed in December, or leaving it as is, before it is submitted to the Henry County Clerk for calculation of tax bills which will go out in May for payment in June and September. The school district receives its portion of property tax revenue in two payments — July and October.The school district collected nearly $652,000 in tax revenue paid under protest by the hospital and how that will now be repaid will hopefully be worked out at meetings between the school district and hospital officials, now that tax status has been determined. Meanwhile, while the hospital was paying taxes it claimed it shouldn’t pay, the added influx of tax revenue raised the equalized assessed valuation of the school district and lowered the district’s overall tax rate to $3.97.The hospital’s tax money was used, under the county tax formula, to cover what are called the school’s “on demand” funds, where the tax rate is set by the amount required. They include tort liability, Illinois Municipal Retirement Fund (IMRF), Social Security, Life Safety, and any outstanding bonds.The rates of other funds which make up the total, including education; operation, building and maintenance; transportation; and working cash, are restricted to limits set by the voters and determined by the board. If the board had amended the levy Thursday night by changing amounts in on-demand funds, the overall tax rate would have increased from the current $4.42, to $4.44 per $100,000 of EAV. That move, said Supt. Shane Kazubowski, would put increased pressure on the education fund, already lessened by continuing loss of state aid.The board voted to leave the levy as is, which will protect the education fund, but raise the overall tax rate to $4.48. Kazubowski said the increase will amount to about $27 a year more in taxes on a $100,000 house.Kazubowski said, by filling out required paperwork, the district can reclaim $26,167 of the $300,924 in state aid, or eight cents on the dollar, lost over the past four years due to the artificially inflated EAV. On the bright side, if the 1-cent countywide school facility sales tax on the April 9 ballot is passed, Wethersfield’s tax rate will go down by as much as 15 cents.The tax exemption ruling ends a four-year-long, at times contentious ordeal neither the hospital nor school asked for but had to deal with while waiting for the state to decide how it would rule.When the original Kewanee hospital was built in 1919, non-profit entities were kept off the tax rolls because they were determined to be serving the public good, not someone’s pocketbook. By the time a new hospital was built on West South Street in 2007, the attitudes of government tax collectors had changed over nine decades and non-profits began to be looked at more closely as to whether or not they served the public good or were too profit-oriented, Kewanee Hospital’s old tax status terminated when they left the site on Elliott Street and application had to be made to grant exempt status to the new facility. Before the Department of Revenue got around to acting on Kewanee’s application, a lawsuit challenging the non-profit tax-exempt status of a Provina Health Care facility in Champaign was upheld by the Illinois Supreme Court and all tax exemption applications were frozen.This extended a request which, if handled by the normal review process, would probably have been determined within a year or less, to four years of uncertainty for both the hospital and the taxing bodies which collected revenue from what the hospital paid. These included the city of Kewanee, Wethersfield Township, Henry County, Kewanee Public Library District, and Wethersfield School District 230, which received the largest share of the distribution. Eventually, the state determined that if a hospital can prove it spends an amount equal to its tax bill on charity and community service, it will be exempted from paying taxes. Kewanee Hospital has documented that it more than meets that standard with over $3 million in free and reduced-fee services. Kazubowski said Chief Henry County Assessment Officer Lindi Kernan had informed him that the IDR ruled Kewanee Hospital 97.6 percent tax exempt, with 2.4 percent of the property still assessed for tax purposes. That lowered the amount collected by the school district over four years from $652,000 to $636,000.Kazubowski said, bottom line, paying back the hospital’s tax money will cause financial difficulties but will by no means be fatal to the district. “Are we broke? No.” Kazubowski said. “Are we where our auditors would like? No. But at least we have operating fund balances and I am being told there are many school districts in the state right now who don’t.”In other business:- It was reported that the new electronic security system has been installed and is in operation. - High-speed fiber optic Internet service has been installed by the Geneseo Telephone Company providing 50 MB service to the school, about 15 times faster that the T-1 line previously used at approximately the same cost.- A bid of $30,000, about $10,000 under estimate, was approved for a new stage curtain and track in the high school gym. The bid was from Norcostco, a Minneapolis firm who will install it this summer. The old curtain no longer meets fire code and could no longer be fireproofed, due to its age.After closed session, the board:- Employed Laurie Steger as high school assistant track coach and Mary Baker as volunteer high school assistant track coach.- Employed Mike Kiss as a short-term mathematics substitute teacher from April 15 through the end of the school year.- Employed Colin Nowak as cafeteria helper through the end of the school year.